Marketing Through a Recession

One of the fundamental tenets of marketing is, "Those companies that emphasize marketing during a bad economy recover faster and emerge stronger when the economy improves."

It's been proven time and again through case studies in numerous industries, but when it's YOUR institution ... facing shrinking spreads and changing regulations ... the gamble seems awfully risky. If only we had some apples-to-apples statistics to prove it...

Thanks to a Callahan and Associates article released on May 10, we now can base our marketing decisions on relevant data.

This study looked at the marketing expenditures of 645 credit unions and segmented them by:

• Institutions that decreased marketing expenses
• Institutions that kept marketing expenses relatively flat
• Institutions that increased marketing expenses

The study then compared these groupings based on factors like: loan growth, deposit growth, checking growth and member/customer growth.

Click here for the actual article

The bottom line is that those institutions that increase marketing are more likely to experience:

• Higher loan growth in all areas (except mortgage). In fact, those that increased marketing were the ONLY group to experience positive auto loan growth.
• Higher checking growth
• Higher IRA growth

With the onslaught of negative media towards the "Too Big to Fail" banks and the positive national coverage of credit unions and community banks, the environment is better today than it ever has been for you to position yourself for growth. You don't necessarily need a big bank budget to take market share, you simply need to make yourself part of the community conversation.

Awareness and differentiation can drive growth. And when you partner with a marketing firm with a ROI Guarantee, there's nothing left to chance .. and the upside is positioning your institution correctly ... moving forward with expert help at your side!

Inset is a chart from the referenced CreditUnions.com article

Has This Recession Seen It's Shadow?

With all due respect to Punxsutawney Phil, that lovable, furry creature charged with predicting the longevity of our winters, it's hard to predict beyond a shadow (pun intended) of a doubt whether seeing this recession's shadow means six weeks, six months or six more years of this mess.  Of course, when Phil is wrong, no one will demand that he live above ground or perform community service.  Not one iota of the vitriol that would be directed at, say, Treasury Secretary Geithner if his forecasts went awry.  Plus, Phil never forgot to pay his income taxes.

There are signs of an early spring in this recession.  While the stock market has been on a bit of a roll, the credit markets, where this whole mess began, is showing signs of a spring awakening:

• Companies with good credit are borrowing more in the bond market.
• Confidence in the banking industry (especially community banks and credit unions) seems to be returning slowly.
• Junk bonds are coming back into vogue (yields are about 16.5 percentage points more than Treasuries, a large premium for risk).
• The market for securities made from bundles of car loans and student loans, a vital source of credit, has started to stabilize.
• Home buyers are seeing some benefits of the credit thaw as interest rates on fixed, 30-year mortgages fell to the lowest levels on record.

I can't see my shadow, can this be over?

 Wait a minute, like they say about the weather in Vermont, if you don't like this economy, wait five minutes.

• Credit markets are still fragile.  Ratings agencies are slashing the credit scores of such bellwether companies as General Electric.
• General Motors bondholders are bracing for a possible bankruptcy filing.
• If unemployment continues to race higher, or the stimulus package fails to take root and the economy enters a deeper period of decline, many of the tentative gains in credit could come undone, analysts say.
• With the idled capacity in the U.S.--workers, factories, retail outlets, freight lines, bank lending--many economists feel that even if the recession miraculously ended tomorrow, it would take at least three years before full employment returned and output rose enough for the economy to operate at peak levels.

Uh-oh, I think I see my shadow.

It is abundantly clear that it is virtually impossible to predict with any degree of certainty what will happen in the stock or credit markets next week.  Forget about predicting next quarter or the quarter after that.  What is clear is that community banks and credit unions need to forget about looking for their shadow and take advantage of the unique opportunity to grow market share as the negative effects of safety and soundness continue to plague the larger financial institutions.

A recent survey of 755 community banks across the U.S. showed that 55% of those banks had dramatically increased deposits, and 40% had increased loan volume since the beginning of the year.  Is your bank or credit union one of them?  Are you still waiting for that definitive answer of when this mess will end so you can then go back to some form of banking normalcy?

No one correctly predicted the breadth and depth of this economic cataclysm.  And if you're waiting for someone to tell you when it's over, you might as well borrow Phil for a few days.  The banks and credit unions that are acting now to make a positive impact with customers, prospects and their communities will be the true winners before, during and after the economic turnaround happens.